Court approves Global Crossing reorganization

December 18, 2002|By From Tribune news services.

NEW YORK — A federal bankruptcy judge on Tuesday approved the reorganization plan of Global Crossing Ltd., raising hopes that the company would survive one of the largest bankruptcy filings in corporate history.

The plan would leave the high-speed fiber-optic carrier's investors with nothing, while handing debtors pennies on the dollar and a minority stake in the re-emerging firm.

The company, which collapsed under $12.4 billion in debt in January, still needs regulatory approval for the sale of its network to a pair of Asian investors before it can emerge from bankruptcy protection.

That could happen in the first half of 2003, said Global Crossing spokeswoman Tisha Kresler.

"Today, Global Crossing's customers, employees and leadership team received a clear vote of confidence in our future," said John Legere, Global Crossing's chief executive.

Under the plan, Legere will stay on as CEO of the reorganized company.

Global Crossing claimed $22.4 billion in assets when it filed for bankruptcy, making it the fifth-largest Chapter 11 filing in U.S. corporate history, according to BankruptcyData.com.

Investors and company employees whose retirement savings were invested in company stock lost billions of dollars in the collapse.

A majority stake in the company's assets, consisting mainly of a communications network based on 100,000 miles of fiber-optic cable, was purchased in August for just $250 million by Hong Kong-based Hutchison Whampoa Ltd. and Singapore Technologies Telemedia.

On Tuesday, the court approved Global Crossing's reorganization plan, which values the company at $407 million.

Creditors, who are owed $6.6 billion, would receive about $300 million in cash from Global Crossing and $200 million in notes, as well as a 38.5 percent stake in the new entity. The two Asian investors would hold the remaining 61.5 percent ownership stake.

While under bankruptcy protection, Global Crossing said it has been able to shed all but $200 million in debt, while cutting its workforce to 5,350 from 16,000.

Between January and October, Global Crossing said it signed 1,663 new and renewal customer contracts, which could eventually bring in $783 million in revenue.

The company said its cash on hand had risen to $683 million as of Oct. 31.